Thursday, 18 August 2011
Gold to Acquire Remaining 49% of Africa Mining
Compass announced that it had received a proposal for the acquisition by Compass of a total of 49% of the issued shares (the "Shares") of Africa Mining, subject to Compass completing its then existing option to acquire a total 51% interest in Africa Mining. At that time, the Company formed a special committee of independent directors (the "Independent Committee"), consisting of Messrs. Malcolm Carson and Marshall Auerback, to consider the acquisition of the Shares and advise the board of Compass whether the acquisition of the Shares would be in the best interests of the Company and its shareholders.
Effective July 12, 2011, pursuant to an Option Agreement dated December 3, 2009 among the Company, Africa Mining and the Sellers (as defined below), Compass acquired an additional 31% interest, for a total 51% interest, in Africa Mining through the exercise of an option requiring the completion of additional exploration expenditures of $1.5 million on Africa Mining's properties and the issuance of 3,333,333 units of Compass at a deemed price of $0.15 per unit. Refer to Compass's news release dated July 12, 2011 for further details of this option exercise.
The Shares are currently owned by Madani Diallo and Transocean Finance Pty Ltd. ("Transocean", and together with Madani Diallo, the "Sellers"). Dr. Diallo is a director of the Company. Transocean is a company controlled by James Henderson, who is a director and the Chairman, President and CEO of the Company.
Following its review of the proposed Acquisition, the Independent Committee has recommended to the board, and the board has approved and entered into a share purchase agreement dated August 17, 2011 between the Company, Compass Gold (BVI) Mali Corp. (an indirect, wholly-owned subsidiary of the Company) (the "Subsidiary"), the Sellers and Africa Mining (the "Share Purchase Agreement") to acquire the Shares.
The Company has positioned itself as an emerging mineral exploration company in the highly prospective gold producing areas in South and Western Mali. Mali is the third largest gold producer in Africa. The Acquisition will result in 100% (rather than 51%) control over the assets, including the significant land-holdings, of Africa Mining. Africa Mining currently has permits covering 881 square kilometers located within Mali's Birimian Greenstone Belt, the fastest growing gold production and exploration area in the world. The Company believes that acquisition of 100% of these assets will better position the Company to develop the existing Africa Mining projects and create opportunities to grow through focused acquisition and/or increased land holdings in Mali.
Acquisition Terms
Pursuant to the terms of the Share Purchase Agreement, the Company has agreed to purchase (through the Subsidiary), and the Sellers have agreed to sell, the Shares in consideration for the issuance by the Company of 30,000,000 units (the "Consideration Units"). Each Consideration Unit is comprised of one common share of the Company and one-third of one common share purchase warrant (each whole warrant, a "Warrant") of the Company. Each Warrant will entitle the holder thereof to acquire one common share of Compass at an exercise price of $0.30 per share at any time within four (4) years following the date of issuance of the Warrant.
The Consideration Units will be allocated to the Sellers in proportion to their beneficial holdings of the Shares, as set out below:
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Sellers Number of Shares Number of Consideration Units
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Transocean 75 22,500,000
Dr. Diallo 25 7,500,000
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Total: 100(1) 30,000,000
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Representing 49% of the issued and outstanding shares of Africa Mining.Compass (through the Subsidiary) currently holds 51% of theissued and outstanding shares of Africa Mining.
The Sellers hold a 2% net smelter return royalty over Africa Mining's Yanfolila, Dandoko and Kolondieba properties. Under the Share Purchase Agreement, as a condition of closing the Sellers are required to grant Compass the right to acquire 50% of this royalty (thereby reducing the royalty from 2% to 1%) for the payment of $1,000,000 at any time during a period of 5 years following the closing of the Acquisition (the "Royalty Transaction").
From the period commencing July 12, 2011 (being the date Compass completed the acquisition of its current 51% interest in Africa Mining) to the closing date of the Acquisition, Compass and the Sellers will, unless otherwise agreed, continue to fund Africa Mining in proportion to their current respective shareholdings in Africa Mining (51% Compass; 49% Sellers). Compass has agreed to reimburse the Sellers, at the closing of the Acquisition, for any such amounts funded by the Sellers.
Effective July 12, 2011, pursuant to an Option Agreement dated December 3, 2009 among the Company, Africa Mining and the Sellers (as defined below), Compass acquired an additional 31% interest, for a total 51% interest, in Africa Mining through the exercise of an option requiring the completion of additional exploration expenditures of $1.5 million on Africa Mining's properties and the issuance of 3,333,333 units of Compass at a deemed price of $0.15 per unit. Refer to Compass's news release dated July 12, 2011 for further details of this option exercise.
The Shares are currently owned by Madani Diallo and Transocean Finance Pty Ltd. ("Transocean", and together with Madani Diallo, the "Sellers"). Dr. Diallo is a director of the Company. Transocean is a company controlled by James Henderson, who is a director and the Chairman, President and CEO of the Company.
Following its review of the proposed Acquisition, the Independent Committee has recommended to the board, and the board has approved and entered into a share purchase agreement dated August 17, 2011 between the Company, Compass Gold (BVI) Mali Corp. (an indirect, wholly-owned subsidiary of the Company) (the "Subsidiary"), the Sellers and Africa Mining (the "Share Purchase Agreement") to acquire the Shares.
The Company has positioned itself as an emerging mineral exploration company in the highly prospective gold producing areas in South and Western Mali. Mali is the third largest gold producer in Africa. The Acquisition will result in 100% (rather than 51%) control over the assets, including the significant land-holdings, of Africa Mining. Africa Mining currently has permits covering 881 square kilometers located within Mali's Birimian Greenstone Belt, the fastest growing gold production and exploration area in the world. The Company believes that acquisition of 100% of these assets will better position the Company to develop the existing Africa Mining projects and create opportunities to grow through focused acquisition and/or increased land holdings in Mali.
Acquisition Terms
Pursuant to the terms of the Share Purchase Agreement, the Company has agreed to purchase (through the Subsidiary), and the Sellers have agreed to sell, the Shares in consideration for the issuance by the Company of 30,000,000 units (the "Consideration Units"). Each Consideration Unit is comprised of one common share of the Company and one-third of one common share purchase warrant (each whole warrant, a "Warrant") of the Company. Each Warrant will entitle the holder thereof to acquire one common share of Compass at an exercise price of $0.30 per share at any time within four (4) years following the date of issuance of the Warrant.
The Consideration Units will be allocated to the Sellers in proportion to their beneficial holdings of the Shares, as set out below:
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Sellers Number of Shares Number of Consideration Units
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Transocean 75 22,500,000
Dr. Diallo 25 7,500,000
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Total: 100(1) 30,000,000
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Representing 49% of the issued and outstanding shares of Africa Mining.Compass (through the Subsidiary) currently holds 51% of theissued and outstanding shares of Africa Mining.
The Sellers hold a 2% net smelter return royalty over Africa Mining's Yanfolila, Dandoko and Kolondieba properties. Under the Share Purchase Agreement, as a condition of closing the Sellers are required to grant Compass the right to acquire 50% of this royalty (thereby reducing the royalty from 2% to 1%) for the payment of $1,000,000 at any time during a period of 5 years following the closing of the Acquisition (the "Royalty Transaction").
From the period commencing July 12, 2011 (being the date Compass completed the acquisition of its current 51% interest in Africa Mining) to the closing date of the Acquisition, Compass and the Sellers will, unless otherwise agreed, continue to fund Africa Mining in proportion to their current respective shareholdings in Africa Mining (51% Compass; 49% Sellers). Compass has agreed to reimburse the Sellers, at the closing of the Acquisition, for any such amounts funded by the Sellers.
